LATEST THINKING

Data-rich, profit poor

OVERVIEW

As their traditional businesses are disrupted, insurance companies will need to find new sources of revenue or risk extinction. Leading insurers of the future will find ways to monetize their data, turning it into revenue and competitive advantage. We estimate that data monetization could be worth $6-8 billion of new annual profit for the insurance industry—making up for a significant portion of the anticipated profit loss due to disruption.

KEY FINDINGS

The insurance industry is at a tipping point. New entrants and new technologies are emerging that can mitigate or even avoid insurance loss. In fact, all new vehicles sold will be connected by 2025. And automakers are likely to include insurance coverage with their autonomous vehicles.

Yet many insurers already possess a significant weapon with which to win the battle for new sources of revenue. They hold vast amounts of data with unique insights that can be connected and enriched with external data sources to fuel new business models. However, traditionally, they have struggled to translate this information into profit.

Data flowing in is expanding exponentially from a broad range of sources. Monetizing it will be a key success factor for insurers. Yet, they risk being left out as other players are well-positioned to capture the opportunity. With increasing numbers of players seeking to capitalize on connected technologies, insurers cannot afford to hesitate.

RECOMMENDATIONS

As traditional sources of revenue decline in the wake of digital disruption, insurers have an opportunity to turn their data and insights into new revenue and competitive advantage.